Depositing gift cash in my bank account

[rodrigo57]

What is the name of your state? Florida
I am 24 year old citizen of the United States but I legally came here with my parents from an Asian country when I was a child. Most of my relatives are still in that Asian country. I visited that Asian country many times including in 2017 and 2018. In 2017 and 2018, each time, my relatives gave me around 9,000 dollars cash as gift and I brought that cash with me while returning back to the United States. Now I want to use that money and if I deposit this 18,000 dollars cash in my bank account now, will I face any problems from IRS or on tax returns? My passport proves my visits to that Asian country. Do I need to produce any letter or anything else from my relatives to show that they in fact gave me that cash gift?

 

[adjusterjack]

will I face any problems from IRS or on tax returns?

You might, if you cannot document the source of the money. The bank will report the deposit. If you make smaller deposits to hide that you have a large sum, that's a crime.

My passport proves my visits to that Asian country.

But proves nothing with regard to the money.

Do I need to produce any letter or anything else from my relatives to show that they in fact gave me that cash gift?

You might not need to produce it but it's best to have it and not need it, rather than need it and not have it.

Get the letter (in English) confirming that you were given the gift of $18,000.

 

[xylene]

There is nothing stopping you from using the cash to make regular purchases.

 

[rodrigo57]

Appreciate your advice.

"Get the letter (in English) confirming that you were given the gift of $18,000 " can I get the letter now or is it too late? My relatives in that country will be happy to give that letter if I request now. Should it be notartized (or witnesses), etc, or getting a letter with their address, signature, the details of the gift amount, etc. would be fine?

"There is nothing stopping you from using the cash to make regular purchases." I agree but I need to pay for college tuition now and the only way to do is by bank transfer. Therefore, I need to put that money in a bank.

 

[davew9128]

Paranoid much? Seriously. All this time and effort into avoiding a bank filing a $10k cash transaction...

 

[adjusterjack]

"Get the letter (in English) confirming that you were given the gift of $18,000 " can I get the letter now or is it too late?

It's not too late. The sooner the better.

Should it be notartized (

Notarized would be preferable.

 

[zddoodah]

if I deposit this 18,000 dollars cash in my bank account now, will I face any problems from IRS or on tax returns?

Probably not, but...

Federal law requires that banks must report any deposits over $10k to the IRS by submitting IRS Form 8300. Whether the IRS will care is something no one here can predict. However, at some point, you might be asked to explain and/or prove where the money came from. This article discusses what happens in some detail.

Do I need to produce any letter or anything else from my relatives to show that they in fact gave me that cash gift?

That would be one way of responding to an inquiry from the IRS.

There is nothing stopping you from using the cash to make regular purchases.

Rather obviously, there are numerous things for which cash will not be suitable (e.g., online purchases).

"Get the letter (in English) confirming that you were given the gift of $18,000 " can I get the letter now or is it too late? My relatives in that country will be happy to give that letter if I request now. Should it be notartized (or witnesses), etc, or getting a letter with their address, signature, the details of the gift amount, etc. would be fine?

I'm not sure what you're quoting, but no, it's not too late to get a letter. However, it's probably premature unless you think it will take a while. I have no opinion about the content of any such letter.

 

[xylene]

You can borrow money at extremely low interest for schooling and defere the payments for YEARS with options for grants or other relief .

Rather obviously, there are numerous things for which cash will not be suitable (e.g., online purchases).

Buy gift cards.

Rather obviously, I presumed that the OP was not desitute or lacking an income stream where current purchases could be substituted for cash.

Perhaps if the urgent need to deposit the money for a large and pressing expense was stated in the first post.

 

[Zigner]

I'm not sure what you're quoting, but no, it's not too late to get a letter. However, it's probably premature unless you think it will take a while. I have no opinion about the content of any such letter.

It's a quote of a portion of adjusterjack's reply.

 

[rodrigo57]

Appreciate all your advice.

If I don’t get the letter now and IRS ask me from where I got that money, can I ask IRS few weeks time and get that letter from my relatives? Or IRS will sit on top of my head to produce that letter immediately, once IRS contacts me? I do not want to cause inconvenience to my relatives with such letter (such request is generally disrespectful in their culture but they can understand me if I request) unless IRS really ask me to produce evidence.

Finally, will such letter fulfill the purpose, i.e., satisfies the IRS that the money is in fact a gift from that country, or anything else I need to do to convince the IRS?

 

[Taxing Matters]

Appreciate all your advice.

If I don’t get the letter now and IRS ask me from where I got that money, can I ask IRS few weeks time and get that letter from my relatives? Or IRS will sit on top of my head to produce that letter immediately, once IRS contacts me?

What generally would happen is that the IRS would send you a computer generated letter saying that the IRS thinks you had unreported income in the amount of the cash deposit and asking you to respond by a certain date, usually 3-4 weeks from the date of the letter, if you disagree with that proposed increase in income. You can ask for more time if you need it; whether the extra time you seek will be granted is up to the unit that issued the letter.

Finally, will such letter fulfill the purpose, i.e., satisfies the IRS that the money is in fact a gift from that country, or anything else I need to do to convince the IRS?

No way to know if the unit reviewing the matter would accept your explanation that the money came from gifts from relatives, especially since I can't see the letter that you'd supply.

Don't let this issue stress you out too much. It's impossible to predict exactly what is going to happen here. It may turn out that the IRS doesn't even send you the letter. And if it does, the IRS might accept your explanation for where the money came from. At worst, you'd have some extra tax to pay, interest, and perhaps a penalty. While not great to have to pay that, don't let the fear of that possibility stop you from using your money.

 

[rodrigo57]

Appreciate your reply.

If I deposit 11,000 dollars (i.e., above 10,000 dollar limit) cash in my bank (bank 1) account, and use the remaining 7,000 dollars (i.e., below 10,000 dollar limit) to pay my credit card bill by physically going to another bank (bank 2) that issued the credit card and pay cash then, once the IRS decides to send a notice about that 11,000 cash deposit to bank 1, will IRS will know about that 7,000 cash that I paid to the bank 2 for my credit card bill and ask about that 7,000 cash also, or the IRS will limit to the 11,000 cash deposit in bank 1 only?

 

[Zigner]

Why not pay the credit card ($7k), deposit $9,900.00, and then hold on to the remaining $1,100.00 for day-to-day expenses. Then, your "normal" income can supplement the $9,900.00 by the $1,100.00 cash that you held?

Please disregard the above. It is bad advice, for which I apologize.

 

[Taxing Matters]

Why not pay the credit card ($7k), deposit $9,900.00, and then hold on to the remaining $1,100.00 for day-to-day expenses. Then, your "normal" income can supplement the $9,900.00 by the $1,100.00 cash that you held?

This idea smacks of structuring of transactions to avoid currency reporting, and structuring is illegal. That can hurt you more than just getting hit with tax on the deposited amount. A deposit of cash in the amount of $9,900 when the customer does not have a history with the bank of making such cash deposits and a reason for those deposits (e.g. a customer that has a primarily cash business) may well raise suspicion in the bank and generate a suspicious activity report (SAR).

 

[Zigner]

This idea smacks of structuring of transactions to avoid currency reporting, and structuring is illegal. That can hurt you more than just getting hit with tax on the deposited amount. A deposit of cash in the amount of $9,900 when the customer does not have a history with the bank of making such cash deposits and a reason for those deposits (e.g. a customer that has a primarily cash business) may well raise suspicion in the bank and generate a suspicious activity report (SAR).

Thank you - I noted it in my (now edited) post.